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All of the following represent bonds secured by real assets except a (n):
a. closed-end mortgage bond
b. equipment trust certificate
c. debenture
d. open-end mortgage bond
AT&T 10-year, $1,000 par value bond is selling at $1,158.91. Interest on this bond is
paid semianually. If the annual yield to maturity is 14%, what is the annual coupon rate
of the AT&T bond?
a. 8.5%
b. 15%
c. 17%
d. none of the above
The terms or covenants of a bond contract are set out in which of the following
documents?
a. debenture
b. trust indenture
c. mortgage
d. negative pledge clause
Christine has just purchased a used Mercedes for $18,995. She plans to make a $2,500
down payment on the new car. What is the amount of her monthly payment on the
remaining loan if she must pay 12% annual interest on a 24-month car loan?
a. $759.53
b. $776.48
c. $894.16
d. $899.87
The Fed Board of Governors:
a. is elected by the member banks
b. is appointed by the Senate
c. has seven members appointed for 14-year terms
d. has seven members appointed for a term of 12 years
Market value added would equal:
a. assets plus liabilities
b. assets minus liabilities
c. common stock price times number of shares outstanding
d. none of the above
_____________ is a short-term debt instrument issued by commercial banks in
denominations of $100,000 or more with typical maturities ranging from one month to
one year that have an active secondary market that allows short-term investors to easily
match their cash or liquidity needs when they arise.
a. A negotiable certificate of deposit (NCD)
b. A repurchase agreement
c. Commercial paper
d. Government bond
e. all of the above
Which of the following is not a method by which the Federal Reserve establishes
monetary policy?
a. setting reserve requirements,
b. altering the discount rate,
c. through federal open market operations,
d. setting bank profitability ratios,
e. none of the above
In general,
a. a revolving credit agreement is equally as expensive but less risky to the firm than a
line of credit.
b. a revolving credit agreement is equally as expensive and more risky to the firm than a
line of credit.
c. a revolving credit agreement is less expensive and less risky to the firm than a line of
credit.
d. a revolving credit agreement is less expensive but more risky to the firm than a line
of credit.
e. none of the above
Which of the following statements is most correct?
a. FDIC membership is required only for banks having national charter.
b. The First Bank of the United States was the first incorporated bank created along
modern banking lines.
c. Secured loans represent the single most important activity of the commercial bank.
d. All the above statements are false.
If a person requires greater return when risk increases, that person is said to be:
a. risk seeking
b. risk averse
c. risk aware
d. risk indifferent
e. none of the above
Under the system of flexible exchange rates, exchange rates are determined by the
actual process of supply and demand in the foreign exchange market.
New York Stock Exchange is an example of a primary market.
During the past couple of decades, generally high fixed-rate mortgage loan interest rates
and the desire to extend housing ownership to more individuals in the U.S., the use of
adjustable-rate mortgages grew in usage.
Churning happens when a broker constantly buys and sells securities from a client's
portfolio in an effort to generate commissions.
The bimetallic standard was difficult to maintain because the market ratio between
silver and gold changed constantly.
Federal Reserve actions that stimulate or repress the level of prices or economic activity
are called defensive activities.
Crucial elements of the financial environment and well-developed financial system
include:
1. financial institutions
2. financial markets
3. investments and financial management
4. all of the above
5.
The international monetary system consists of institutions and mechanisms that foster
international trade, manage the flow of financial capital, and determine currency
exchange rates.
The cash conversion cycle measures a firm's financing gap in terms of time.
Pension funds receive contributions from employees and/or their employers and invest
the proceeds on behalf of the employees for use during their retirement years.
